Dubai proposes gold coins as legal tender in the UAE
Posted on 11 February 2010 with no comments from readers
The Dubai Multi Commodities Centre has proposed that the UAE Central Bank issue gold coins that will be legal currency for the first time in the modern history of the Middle East.
In September 2007 the DMCC minted the first ever UAE commemorative gold coin featuring the Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum (see above). The proposed design for the new currency has the President of the UAE, His Highness Sheikh Khalifa bin Zayed on one side and the world’s tallest building, the Burj Khalifa on the obverse.
New gold currency
The new coins would join the ranks of other gold coins that are legal tender such as the Australian Nugget, British Sovereign and South African Krugerand that are already popular with investors in gold in the UAE.
DMCC executive chairman Ahmad bin Sulayem said: ‘We are confident that this design represents the face of the modern UAE. This is a great time to launch a reliable, easily transacted legal tender gold coin, since the level of interest in gold investment is the highest it has ever been globally.’
Among gold bugs there is bound to be immediate speculation as to whether this would mark a step towards a gold-backed currency in the UAE. But that is clearly a very presumptive and premature conclusion as the UAE does not presently even have any official gold reserves.
Gold increasingly popular
This is therefore better seen as a confirmation of the growing appreciation of gold as an investment class in the emirates, a country that often leads trends in the Arabian peninsula much in the way that what is new in California tends to spread across America.
However, it would also be wrong to see this as the start of a big rush to invest in the yellow metal. Take up for the DMCC’s other recent initiative, the Dubai Gold ETF has been very disappointing, and the new gold coinage is actually a third attempt to win retail investors over to the yellow metal.
Sales of the original Sheikh Mohammed gold coins were poor as the premium paid over the price of gold put buyers off. Perhaps a legal gold currency will better capture the public imagination.
